Forum News RSS Feedhttp://mfdf.org/Mon, 19 Mar 2018 09:52:55 -0400FeedCreator 1.8.3 (obRSS 3.2.7)http://www.mfdf.com/site/pages/images/mfdf_hat_logo_front.jpgFed, Treasury to Publish LIBOR Alternatives; Transition Challenges ExpectedMon, 19 Mar 2018 09:00:00 -0400Mon, 19 Mar 2018 09:00:00 -0400http://mfdf.org/forum-news/article/fed-treasury-to-publish-libor-alternativesLeslie Beckbridge<p>Reuters is <a href="https://www.reuters.com/article/uk-usa-fed-libor/u-s-fed-to-publish-libor-alternatives-april-3-idUKKCN1GC2O3" target="_blank">reporting</a> that the Federal Reserve and the Treasury Department&rsquo;s Office of Financial Research have developed three Treasury repo reference rates to replace the LIBOR rate. The Fed is expected to publish the LIBOR alternatives -- the Secured Overnight Financing Rate (SOFR), the Broad General Collateral Rate (BGCR) and the Tri-Party General Collateral Rate (TGCR) -- on April 3.&nbsp; A report in the <a href="https://www.ft.com/content/6b6e0c92-2055-11e8-a895-1ba1f72c2c11" target="_blank">Financial Times</a> notes, however, that abolishing LIBOR is proving to be challenging. The FT report notes that LIBOR remains an important part of the financial system and that contracts worth a notional $240 trillion use the benchmark for establishing the cost of payments on loans, derivatives and other instruments. The FT writes that LIBOR has endured because it has provided stable, predictable payments known months in advance and there are significant hurdles to switching to another benchmark, including changing thousands of contracts that reference LIBOR.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/ARSfNzhUbbs" height="1" width="1" alt=""/>Reuters is reporting that the Federal Reserve and the Treasury Department’s Office of Financial Research have developed three Treasury repo reference rates to replace the LIBOR rate. The Fed is expected to publish the LIBOR alternatives -- the Secured Overnight Financing Rate (SOFR), the Broad General Collateral Rate (BGCR) and the Tri-Party General Collateral Rate (TGCR) -- on April 3. A report in the Financial Times notes, however, that abolishing LIBOR is proving to be challenging. The FT report notes that LIBOR remains an important part of the financial system and that contracts worth a notional $240 trillion use the benchmark for establishing the cost of payments on loans, derivatives and other instruments. The FT writes that LIBOR has endured because it has provided stable, predictable payments known months in advance and there are significant hurdles to switching to another benchmark, including changing thousands of contracts that reference LIBOR.]]>http://mfdf.org/forum-news/article/fed-treasury-to-publish-libor-alternativesBlackRock Filing Cites Criticism of Index Investing as a Primary RiskThu, 15 Mar 2018 09:00:00 -0400Thu, 15 Mar 2018 09:00:00 -0400http://mfdf.org/forum-news/article/blackrock-filing-cites-criticism-of-index-investingLeslie Beckbridge<p><a href="https://uk.reuters.com/article/uk-blackrock-funds-index/blackrock-says-outside-commentaries-on-index-funds-could-pose-risk-idUKKCN1GC34K" target="_blank">Reuters</a> reported that BlackRock recently disclosed that third-party commentary on the increasing growth of index investing may hurt its business. In its latest <a href="https://www.sec.gov/Archives/edgar/data/1364742/000156459018003744/blk-10k_20171231.htm" target="_blank">10-K</a> filing, BlackRock in describing the risk writes: &ldquo;&hellip;some commentators have proposed policy measures in connection with the discourse in this area, including limits on stakes managed by asset managers. If the conclusions advanced by such commentators were to gain traction or result in the enactment of policy measures that place limits on asset managers, BlackRock&rsquo;s business operations, reputation or financial condition may be adversely affected.&rdquo; The risk disclosure also notes that there is significant literature casting doubt on these third-party assumptions.&nbsp; BlackRock also cited as a primary risk new tax legislation which the company said may adversely affect its effective tax rate, business and overall financial condition.&nbsp; <a href="https://www.moodys.com/research/Moodys-US-asset-managers-to-significantly-benefit-from-new-tax--PR_380185?WT.mc_id=AM~RmluYW56ZW4ubmV0X1JTQl9SYXRpbmdzX05ld3NfTm9fVHJhbnNsYXRpb25z~20180301_PR_380185" target="_blank">Moody&rsquo;s</a> is reporting, however, that the tax law changes could benefit large asset managers, including BlackRock.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/fSEgjIyvNG8" height="1" width="1" alt=""/>Reuters reported that BlackRock recently disclosed that third-party commentary on the increasing growth of index investing may hurt its business. In its latest 10-K filing, BlackRock in describing the risk writes: “…some commentators have proposed policy measures in connection with the discourse in this area, including limits on stakes managed by asset managers. If the conclusions advanced by such commentators were to gain traction or result in the enactment of policy measures that place limits on asset managers, BlackRock’s business operations, reputation or financial condition may be adversely affected.” The risk disclosure also notes that there is significant literature casting doubt on these third-party assumptions. BlackRock also cited as a primary risk new tax legislation which the company said may adversely affect its effective tax rate, business and overall financial condition. Moody’s is reporting, however, that the tax law changes could benefit large asset managers, including BlackRock.]]>http://mfdf.org/forum-news/article/blackrock-filing-cites-criticism-of-index-investingCommissioners, Industry Point to Limits in Latest SEC Cyber Security Guidance Wed, 14 Mar 2018 09:00:00 -0400Wed, 14 Mar 2018 09:00:00 -0400http://mfdf.org/forum-news/article/commissioners-industry-point-to-limits-in-latest-sec-cybersecurity-guidanceLeslie Beckbridge<p>The SEC recently published additional <a href="https://www.sec.gov/rules/interp/2018/33-10459.pdf" target="_blank">guidance</a> to public companies on preparing policies and procedures and providing disclosures about cybersecurity risks and incidents. The guidance also urges companies to disclose the extent of boards of directors&rsquo; role in risk oversight and to include in disclosures the nature of their board&rsquo;s role in overseeing the management of cybersecurity risk. The new guidance was hailed for addressing emerging risks, including ransomware, phishing and DDOS attacks. Industry participants also welcomed the guidance&rsquo;s attention to insider trading risk linked to undisclosed cybersecurity issues.Commentators note, however, that the guidance still may not go far enough. An <a href="https://www.csoonline.com/article/3260006/data-breach/secs-new-cybersecurity-guidance-falls-short.html" target="_blank">article</a> in risk management publication CSO observes that the SEC&rsquo;s recommendations include no consequences for firms who fail to follow them. The article points out that, in contrast, several states have enacted breach notification laws that have significant enforcement power behind them. Commissioners <a href="https://www.sec.gov/news/public-statement/statement-stein-2018-02-21" target="_blank">Kara Stein</a> and <a href="https://www.sec.gov/news/public-statement/statement-jackson-2018-02-21" target="_blank">Robert Jackson</a> have also criticized the guidance for not going far enough, with Stein saying that it merely reiterates the SEC&rsquo;s guidance issued in 2011 and could have helped companies formulate more meaningful disclosure for investors, among other things.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/qBe9JvQrVk8" height="1" width="1" alt=""/>The SEC recently published additional guidance to public companies on preparing policies and procedures and providing disclosures about cybersecurity risks and incidents. The guidance also urges companies to disclose the extent of boards of directors’ role in risk oversight and to include in disclosures the nature of their board’s role in overseeing the management of cybersecurity risk. The new guidance was hailed for addressing emerging risks, including ransomware, phishing and DDOS attacks. Industry participants also welcomed the guidance’s attention to insider trading risk linked to undisclosed cybersecurity issues.Commentators note, however, that the guidance still may not go far enough. An article in risk management publication CSO observes that the SEC’s recommendations include no consequences for firms who fail to follow them. The article points out that, in contrast, several states have enacted breach notification laws that have significant enforcement power behind them. Commissioners Kara Stein and Robert Jackson have also criticized the guidance for not going far enough, with Stein saying that it merely reiterates the SEC’s guidance issued in 2011 and could have helped companies formulate more meaningful disclosure for investors, among other things.]]>http://mfdf.org/forum-news/article/commissioners-industry-point-to-limits-in-latest-sec-cybersecurity-guidanceWhistleblower Decision May Hold Mixed Outcomes for FirmsTue, 13 Mar 2018 09:00:00 -0400Tue, 13 Mar 2018 09:00:00 -0400http://mfdf.org/forum-news/article/whistleblower-decision-may-hold-mixed-outcomes-for-firmsLeslie Beckbridge<p>The U.S. Supreme Court&rsquo;s recent <a href="https://www.supremecourt.gov/opinions/17pdf/16-1276_b0nd.pdf" target="_blank">ruling</a>&nbsp;that the Dodd-Frank Act protects whistleblowers from retaliation only if they have brought their claims of securities law violations directly to the SEC may increase risk for companies and limit protections for whistleblowers, <a href="https://www.reuters.com/article/us-usa-court-whistleblower/supreme-court-declines-to-broaden-whistleblower-protections-idUSKCN1G51Y3" target="_blank">media reports</a> say. <strong>At issue in the case was</strong> whether the anti-retaliation provision for whistleblowers in the Dodd-Frank Act extends to individuals who have not reported the alleged misconduct to the SEC and thus fall outside Dodd-Frank&rsquo;s definition of &ldquo;whistleblower.&rdquo; The Justices voted 9-0, with Justice Ruth Bader Ginsburg opining: &ldquo;The core objective of Dodd-Frank&rsquo;s whistleblower program is to aid the Commission&rsquo;s enforcement efforts by &ldquo;motivat[ing] people who know of securities law violations to tell the SEC.&rdquo; According to a Wall Street Journal <a href="https://blogs.wsj.com/riskandcompliance/2018/02/23/whistleblower-ruling-adds-a-risk-for-companies/" target="_blank">article</a> the decision may increase risk for companies because it may lead more employees to report to the SEC directly instead of initially reporting violations internally. A lawyer quoted in the article said the SEC&rsquo;s policy is to be more lenient with self-reporting firms than if the SEC learns of a securities law violation via other means. Other individuals quoted in the article noted however that the decision gives companies an opportunity to review how they handle complaints inhouse. Other industry observers <a href="https://www.natlawreview.com/article/digital-realty-supreme-court-hands-sec-big-loss-companies-should-remain-vigilant" target="_blank">note</a> that the impact of the ruling is not immediately clear and several outcomes remain possible.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/s3fBoeku1rA" height="1" width="1" alt=""/>The U.S. Supreme Court’s recent ruling that the Dodd-Frank Act protects whistleblowers from retaliation only if they have brought their claims of securities law violations directly to the SEC may increase risk for companies and limit protections for whistleblowers, media reports say. At issue in the case was whether the anti-retaliation provision for whistleblowers in the Dodd-Frank Act extends to individuals who have not reported the alleged misconduct to the SEC and thus fall outside Dodd-Frank’s definition of “whistleblower.” The Justices voted 9-0, with Justice Ruth Bader Ginsburg opining: “The core objective of Dodd-Frank’s whistleblower program is to aid the Commission’s enforcement efforts by “motivat[ing] people who know of securities law violations to tell the SEC.” According to a Wall Street Journal article the decision may increase risk for companies because it may lead more employees to report to the SEC directly instead of initially reporting violations internally. A lawyer quoted in the article said the SEC’s policy is to be more lenient with self-reporting firms than if the SEC learns of a securities law violation via other means. Other individuals quoted in the article noted however that the decision gives companies an opportunity to review how they handle complaints inhouse. Other industry observers note that the impact of the ruling is not immediately clear and several outcomes remain possible.]]>http://mfdf.org/forum-news/article/whistleblower-decision-may-hold-mixed-outcomes-for-firmsMFDF Webinar: Evaluated Bond Pricing - A New Paradigm?Mon, 12 Mar 2018 09:00:00 -0400Mon, 12 Mar 2018 09:00:00 -0400http://mfdf.org/forum-news/article/mfdf-webinar-evaluated-bond-pricingLeslie Beckbridge<p dir="ltr" align="left">Evaluated bond pricing is one of the most widely used methods for mutual funds and other investors to meet their obligations to fair value their portfolios on a regular basis. Typically illiquid and thinly traded, fixed income products require the deployment of some kind of valuation technique to be able to produce a daily price for NAV calculations.</p>
<p>For many decades this business was an esoteric and arcane pursuit, conducted by a small number of firms living happily beneath the regulatory radar. In recent years, however, the industry has been experiencing a shake up, with more regulatory scrutiny and a burst of consolidation and realignment amongst providers. This has called into question some longstanding operational norms and assumptions amongst pricing vendors and their users.</p>
<p>This process has culminated in three developments that we expect will produce a profound paradigm change in the evaluated bond pricing market in 2018. Revised audit rules from the PCAOB, new pricing technical standards from the AICPA and a determination by the SEC to revisit it's established mutual fund valuation guidance will drive far reaching change in both the production and use of this valuation technique.</p>
<p>These changes will have significant and extensive operational and governance implications for the mutual fund users of evaluated bond pricing and the vendors who produce the data. There will also be material changes in the way these parties interact, in terms of due diligence obligations on the behalf of users and transparency and creditation by the providers.</p>
<p>Voltaire Advisors have produced a detailed Special Report reviewing and analyzing these developments. The issues, and their implications for fund board directors, will be discussed in this webinar.</p>
<p dir="ltr" align="left"><strong>This webinar will be broadcast live from 2:00 pm&nbsp;to 3:00 pm&nbsp;Eastern time on Tuesday, March 13, 2018. <a href="http://mfdf.org/event-details?EVENTID=5445" target="_parent">Register online</a>.</strong></p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/I05USBEAPtk" height="1" width="1" alt=""/>Evaluated bond pricing is one of the most widely used methods for mutual funds and other investors to meet their obligations to fair value their portfolios on a regular basis. Typically illiquid and thinly traded, fixed income products require the deployment of some kind of valuation technique to be able to produce a daily price for NAV calculations.

For many decades this business was an esoteric and arcane pursuit, conducted by a small number of firms living happily beneath the regulatory radar. In recent years, however, the industry has been experiencing a shake up, with more regulatory scrutiny and a burst of consolidation and realignment amongst providers. This has called into question some longstanding operational norms and assumptions amongst pricing vendors and their users.

This process has culminated in three developments that we expect will produce a profound paradigm change in the evaluated bond pricing market in 2018. Revised audit rules from the PCAOB, new pricing technical standards from the AICPA and a determination by the SEC to revisit it's established mutual fund valuation guidance will drive far reaching change in both the production and use of this valuation technique.

These changes will have significant and extensive operational and governance implications for the mutual fund users of evaluated bond pricing and the vendors who produce the data. There will also be material changes in the way these parties interact, in terms of due diligence obligations on the behalf of users and transparency and creditation by the providers.

Voltaire Advisors have produced a detailed Special Report reviewing and analyzing these developments. The issues, and their implications for fund board directors, will be discussed in this webinar.

This webinar will be broadcast live from 2:00 pm to 3:00 pm Eastern time on Tuesday, March 13, 2018. Register online.

]]>http://mfdf.org/forum-news/article/mfdf-webinar-evaluated-bond-pricingCommissioner Stein Sounds Warning on Complex Investment ProductsThu, 08 Mar 2018 10:00:00 -0500Thu, 08 Mar 2018 10:00:00 -0500http://mfdf.org/forum-news/article/commissioner-stein-sounds-warning-on-complex-investment-productsLeslie Beckbridge<p>SEC Commissioner Kara M. Stein recently <a href="https://www.sec.gov/news/speech/stein-sec-speaks-increasing-product-complexity" target="_blank">spoke</a> about the growth of esoteric investment products and cautioned that not all investment products necessarily ought to be created. She raised concerns on the adequacy of disclosures and the appropriateness of these investments for certain investors, comparing complex products to the creatures in science-fiction movie Jurassic Park. &ldquo;How are these products being sold, particularly to retail customers? Even if the disclosure is perfectly clear, does it appropriately inform investor decision-making? If the Jurassic Park guests really understood what could go wrong, do you think they would go on the tour?&rdquo; She pointed specifically to the growth of complex derivatives and market volatility-linked products. According to media <a href="http://www.thinkadvisor.com/2018/02/23/vix-fund-blowups-spur-regulators-to-hunt-for-poten?slreturn=1519417813" target="_blank">reports</a>, the SEC and CFTC are scrutinizing recent trading activity to detect potential misconduct. Stein discussed various ways to tackle the problem, including the not-yet-finalized Consolidated Audit Trail. &ldquo;The CAT will be a critical tool for overseeing the capital markets and will better allow the Commission and the self-regulatory organizations (SROs) to catch up with the industry&rsquo;s rapidly evolving technical sophistication.&rdquo; She also charged stock exchanges that list complex products to effectively surveil for problems and to consider not listing products if they are unable to monitor them. &nbsp;She added that part of the solution lies with industry gatekeepers: lawyers, accountants, exchanges, investment advisors, broker-dealers, and others who are charged with advising clients on their investments or how to comply with the law.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/iEFeOkG7tKY" height="1" width="1" alt=""/>SEC Commissioner Kara M. Stein recently spoke about the growth of esoteric investment products and cautioned that not all investment products necessarily ought to be created. She raised concerns on the adequacy of disclosures and the appropriateness of these investments for certain investors, comparing complex products to the creatures in science-fiction movie Jurassic Park. “How are these products being sold, particularly to retail customers? Even if the disclosure is perfectly clear, does it appropriately inform investor decision-making? If the Jurassic Park guests really understood what could go wrong, do you think they would go on the tour?” She pointed specifically to the growth of complex derivatives and market volatility-linked products. According to media reports, the SEC and CFTC are scrutinizing recent trading activity to detect potential misconduct. Stein discussed various ways to tackle the problem, including the not-yet-finalized Consolidated Audit Trail. “The CAT will be a critical tool for overseeing the capital markets and will better allow the Commission and the self-regulatory organizations (SROs) to catch up with the industry’s rapidly evolving technical sophistication.” She also charged stock exchanges that list complex products to effectively surveil for problems and to consider not listing products if they are unable to monitor them. She added that part of the solution lies with industry gatekeepers: lawyers, accountants, exchanges, investment advisors, broker-dealers, and others who are charged with advising clients on their investments or how to comply with the law.]]>http://mfdf.org/forum-news/article/commissioner-stein-sounds-warning-on-complex-investment-productsDST Research Finds Firms’ AUM, Margins Surged in 4Q of 2017Wed, 07 Mar 2018 10:00:00 -0500Wed, 07 Mar 2018 10:00:00 -0500http://mfdf.org/forum-news/article/dst-research-finds-firms-aum-margins-surged-in-4q-of-2017Leslie Beckbridge<p>DST&rsquo;s Research, Analytics and Consulting <a href="https://www.prnewswire.com/news-releases/dst-research-finds-asset-managers-operating-margins-match-record-levels-with-surging-aum-and-revenues-300602517.html" target="_blank">reports</a> that the 15 publicly-traded firms that comprise its Asset Manager Composite showed healthy asset growth coming out of 2017. According to DST, the fourth quarter of 2017 was a &ldquo;culmination of the broad-based capital markets and macroeconomic momentum that seemed to build throughout the calendar year.&rdquo; The report presented&nbsp;three high-level takeaways:</p>
<ul>
<li>Cumulative assets under management grew 18.1% year-over-year to a record of over&nbsp;$12.5 trillion, with 14 of the 15 asset management firms experiencing sequential growth in AUM. Nearly 81% of the sequential change in AUM can be attributed to market appreciation.</li>
<li>Asset-generated fee revenues also experienced accelerating growth &ndash; up 14.0% year-over-year and up 4.1% sequentially &ndash; for the Composite group. Record fee revenues of&nbsp;$9.7 billion&nbsp;drove operating margins for the Composite to a record of 35.1% - last achieved during the second quarter of 2015.</li>
<li>Despite the record operating margin for the Composite group, the dynamics at the company level were mixed: eight of the 15 firms saw sequential improvement in operating margins, while seven of the 15 experienced a sequential decline. The&nbsp;three largest&nbsp;public asset management firms (BlackRock, T.&nbsp;Rowe Price, and Invesco) saw their operating margins&nbsp;drop modestly.</li>
</ul><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/TL8-qoS5hYs" height="1" width="1" alt=""/>DST’s Research, Analytics and Consulting reports that the 15 publicly-traded firms that comprise its Asset Manager Composite showed healthy asset growth coming out of 2017. According to DST, the fourth quarter of 2017 was a “culmination of the broad-based capital markets and macroeconomic momentum that seemed to build throughout the calendar year.” The report presented three high-level takeaways:

Cumulative assets under management grew 18.1% year-over-year to a record of over $12.5 trillion, with 14 of the 15 asset management firms experiencing sequential growth in AUM. Nearly 81% of the sequential change in AUM can be attributed to market appreciation.

Asset-generated fee revenues also experienced accelerating growth – up 14.0% year-over-year and up 4.1% sequentially – for the Composite group. Record fee revenues of $9.7 billion drove operating margins for the Composite to a record of 35.1% - last achieved during the second quarter of 2015.

Despite the record operating margin for the Composite group, the dynamics at the company level were mixed: eight of the 15 firms saw sequential improvement in operating margins, while seven of the 15 experienced a sequential decline. The three largest public asset management firms (BlackRock, T. Rowe Price, and Invesco) saw their operating margins drop modestly.

This webinar will be broadcast live from 2:00 to 3:00 Eastern time on Wednesday, March 7, 2018. Register online.

]]>http://mfdf.org/forum-news/article/mfdf-webinar-2018-update-on-fund-auditing-and-accountingSome Board Responsibilities Under Liquidity Rule DelayedMon, 05 Mar 2018 10:00:00 -0500Mon, 05 Mar 2018 10:00:00 -0500http://mfdf.org/forum-news/article/some-board-responsibilities-under-liquidity-rule-delayedLeslie Beckbridge<p>The SEC is <a href="https://www.sec.gov/news/press-release/2018-24" target="_blank">extending</a> the compliance date for provisions of the Liquidity Rule which require fund boards to initially approve the fund&rsquo;s liquidity risk management program and to review certain reports on the operation of the program. The revised compliance date will be June 1, 2019, for larger entities (revised from December 1, 2018) and December 1, 2019, for smaller entities (revised from June 1, 2019). The SEC is also delaying the recordkeeping requirements of the rule related to the materials provided to the fund&rsquo;s board.&nbsp; According to the SEC&rsquo;s interim rule <a href="https://www.sec.gov/rules/interim/2018/ic-33010.pdf" target="_blank">release</a>: &ldquo;Because the Commission is granting funds additional time to incorporate the delayed elements into their programs, we believe that it would be unnecessarily burdensome to require the board to review the fund&rsquo;s program before funds incorporate all elements of the program. Similarly, we believe it is unnecessarily burdensome to require the board to conduct annual reviews of the program prior to the complete development of the fund&rsquo;s program.&rdquo; Boards currently remain responsible for designating the program administrator. The SEC is also not extending the compliance date for the 15% illiquid investment limit of the rule, or the related board and SEC reporting requirements. The SEC is seeking comment on the delay of the board oversight requirements.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/-ZT_U5Nki2A" height="1" width="1" alt=""/>The SEC is extending the compliance date for provisions of the Liquidity Rule which require fund boards to initially approve the fund’s liquidity risk management program and to review certain reports on the operation of the program. The revised compliance date will be June 1, 2019, for larger entities (revised from December 1, 2018) and December 1, 2019, for smaller entities (revised from June 1, 2019). The SEC is also delaying the recordkeeping requirements of the rule related to the materials provided to the fund’s board. According to the SEC’s interim rule release: “Because the Commission is granting funds additional time to incorporate the delayed elements into their programs, we believe that it would be unnecessarily burdensome to require the board to review the fund’s program before funds incorporate all elements of the program. Similarly, we believe it is unnecessarily burdensome to require the board to conduct annual reviews of the program prior to the complete development of the fund’s program.” Boards currently remain responsible for designating the program administrator. The SEC is also not extending the compliance date for the 15% illiquid investment limit of the rule, or the related board and SEC reporting requirements. The SEC is seeking comment on the delay of the board oversight requirements.]]>http://mfdf.org/forum-news/article/some-board-responsibilities-under-liquidity-rule-delayedSEC Urges Advisers to Self-Report Share Class Violations; Budget Request Up for 2019Thu, 01 Mar 2018 10:00:00 -0500Thu, 01 Mar 2018 10:00:00 -0500http://mfdf.org/forum-news/article/sec-urges-advisers-to-self-report-share-class-violationsLeslie Beckbridge<p>The SEC&rsquo;s Division of Enforcement recently <a href="https://www.sec.gov/news/press-release/2018-15" target="_blank">announced</a> a self-reporting initiative that aims to protect advisory clients from undisclosed conflicts of interest and return money to investors. Under the Share Class Selection Disclosure Initiative, the Division will recommend standardized, favorable settlement terms to investment advisers that self-report that they failed to disclose conflicts of interest associated with the receipt of 12b-1 fees by the adviser, its affiliates, or its supervised persons for clients in a 12b-1 fee paying share class when a lower-cost share class of the same fund was available to the clients.&nbsp;The division said it may recommend settlements that will require the adviser to disgorge its gains and pay those amounts to harmed clients, but not impose a civil monetary penalty for eligible advisers. The division also warns that it expects to&nbsp;recommend&nbsp;stronger sanctions in any future actions against investment advisers&nbsp;that engaged in the misconduct but&nbsp;failed to take advantage of the initiative.</p>
<p>The SEC also <a href="https://www.sec.gov/news/press-release/2018-14" target="_blank">announced</a> a $1.658 billion budget request for fiscal year 2019, a 3.5 percent increase over the fiscal year 2018 budget request. The budget request includes a $45 million increase in funding for information technology enhancements to support the agency&rsquo;s cybersecurity capabilities, risk and data analysis, enforcement and examinations, and automation of business processes.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/fl4Pg8lSclQ" height="1" width="1" alt=""/>The SEC’s Division of Enforcement recently announced a self-reporting initiative that aims to protect advisory clients from undisclosed conflicts of interest and return money to investors. Under the Share Class Selection Disclosure Initiative, the Division will recommend standardized, favorable settlement terms to investment advisers that self-report that they failed to disclose conflicts of interest associated with the receipt of 12b-1 fees by the adviser, its affiliates, or its supervised persons for clients in a 12b-1 fee paying share class when a lower-cost share class of the same fund was available to the clients. The division said it may recommend settlements that will require the adviser to disgorge its gains and pay those amounts to harmed clients, but not impose a civil monetary penalty for eligible advisers. The division also warns that it expects to recommend stronger sanctions in any future actions against investment advisers that engaged in the misconduct but failed to take advantage of the initiative.

The SEC also announced a $1.658 billion budget request for fiscal year 2019, a 3.5 percent increase over the fiscal year 2018 budget request. The budget request includes a $45 million increase in funding for information technology enhancements to support the agency’s cybersecurity capabilities, risk and data analysis, enforcement and examinations, and automation of business processes.

]]>http://mfdf.org/forum-news/article/sec-urges-advisers-to-self-report-share-class-violations Academics Study Mutual Fund Voting Patterns in Proxy ContestsWed, 28 Feb 2018 10:00:00 -0500Wed, 28 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/academics-study-mutual-fund-voting-patterns-in-proxy-contestsLeslie Beckbridge<p>A group of academics <a href="https://corpgov.law.harvard.edu/2018/02/12/picking-friends-before-picking-proxy-fights-how-mutual-fund-voting-shapes-proxy-contests/" target="_blank">studied</a> a comprehensive sample of proxy contests and mutual fund voting records from 2008 and 2015 to analyze the funds&rsquo; voting patterns in proxy contests, among other things. The authors present several findings, including that passively-managed funds are less likely to vote for a dissident shareholder.&nbsp; The authors say this is the first study reporting direct evidence that passive funds are more &ldquo;friendly&rdquo; towards management than actively-managed funds, reasoning that unlike actively-managed funds, passive funds are not rewarded by &ldquo;beating the index&rdquo; but instead, they are usually rewarded by low expense ratios and small tracking errors. The study also found that an endorsement from a proxy advisory firm like ISS or Glass Lewis is an important predictor for votes in favor of a dissident shareholder. Specifically, when ISS issues a &ldquo;For&rdquo; recommendation for a dissident, mutual funds&rsquo; support rate is 57.5%, compared with a support rate of 17.8% when ISS releases an &ldquo;Against&rdquo; recommendation. Other findings from the study:</p>
<ul>
<li>Mutual funds are more likely to support a dissident when the target firm experiences poor recent stock price or accounting performance.</li>
<li>Smaller fund families that lack resources to conduct independent proxy research are most responsive to proxy advisors&rsquo; recommendations.</li>
<li>Mutual funds are 11.9 percentage points more likely to vote for hedge fund dissidents than other types of dissidents, all else being equal, consistent with the notion that investors believe that hedge funds are an effective force of governance.</li>
</ul><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/SULtm0Wa2DI" height="1" width="1" alt=""/>A group of academics studied a comprehensive sample of proxy contests and mutual fund voting records from 2008 and 2015 to analyze the funds’ voting patterns in proxy contests, among other things. The authors present several findings, including that passively-managed funds are less likely to vote for a dissident shareholder. The authors say this is the first study reporting direct evidence that passive funds are more “friendly” towards management than actively-managed funds, reasoning that unlike actively-managed funds, passive funds are not rewarded by “beating the index” but instead, they are usually rewarded by low expense ratios and small tracking errors. The study also found that an endorsement from a proxy advisory firm like ISS or Glass Lewis is an important predictor for votes in favor of a dissident shareholder. Specifically, when ISS issues a “For” recommendation for a dissident, mutual funds’ support rate is 57.5%, compared with a support rate of 17.8% when ISS releases an “Against” recommendation. Other findings from the study:

Mutual funds are more likely to support a dissident when the target firm experiences poor recent stock price or accounting performance.

Smaller fund families that lack resources to conduct independent proxy research are most responsive to proxy advisors’ recommendations.

Mutual funds are 11.9 percentage points more likely to vote for hedge fund dissidents than other types of dissidents, all else being equal, consistent with the notion that investors believe that hedge funds are an effective force of governance.

This webinar will be broadcast live from 2:00 to 3:00 Eastern time on Wednesday, February 28, 2018. Register online.

]]>http://mfdf.org/forum-news/article/mfdf-webinar-d-o-insurance-idl-insurance-and-cyber-insuranceHouse Passes Bill Requiring SEC to Issue Subpoena Before Seeking Algorithmic CodesMon, 26 Feb 2018 10:00:00 -0500Mon, 26 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/house-passes-bill-requiring-sec-to-issue-subpoenaLeslie Beckbridge<p>The U.S. House of Representatives <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=403031" target="_blank">passed</a> several bills from the Financial Services Committee recently, one of which amends the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940 to require the SEC to first issue a subpoena before it compels a person to produce or furnish to the SEC algorithmic trading source code or similar intellectual property. This bill, H.R. 3948, which was included in the larger package of legislation, was introduced by Rep. Sean Duffy (R-WI) with Reps. David Scott (D-GA) and Randy Hultgren (R-IL) as original cosponsors on October 4, 2017 and was approved by the Financial Services Committee by a vote of 46-14. Committee Chairman Jeb Hensarling (R-TX) <a href="https://www.congress.gov/congressional-record/2018/02/14/house-section/article/H1155-1" target="_blank">supported</a> the legislation during floor debate, saying: &ldquo;Source code is among a firm&rsquo;s most sensitive information, and this bipartisan provision balances privacy and due process concerns while preserving the SEC&rsquo;s ability to obtain such information when necessary.&rdquo;&nbsp; Committee Ranking Member Maxine Waters (D-CA) <a href="https://democrats-financialservices.house.gov/news/documentsingle.aspx?DocumentID=401179" target="_blank">criticized</a> the bill, saying it &ldquo;would severely hamper the ability of the SEC&hellip;to investigate market disruptions&rdquo; and make &ldquo;it harder for the capital markets cop to detect and stop bad actors.&rdquo;&nbsp; The package of bills passed the House on a bipartisan vote of 271-145, with 43 Democrats joining all but one Republican in voting yes. &nbsp;This package of bills continues a recent pattern of the House passing targeted legislation in anticipation that the Senate will likely pass a financial services regulatory reform bill in the coming months and a House-Senate conference committee will convene to finalize a package to send to the President for signature.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/RO_VsHFdnxU" height="1" width="1" alt=""/>The U.S. House of Representatives passed several bills from the Financial Services Committee recently, one of which amends the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Investment Advisers Act of 1940 to require the SEC to first issue a subpoena before it compels a person to produce or furnish to the SEC algorithmic trading source code or similar intellectual property. This bill, H.R. 3948, which was included in the larger package of legislation, was introduced by Rep. Sean Duffy (R-WI) with Reps. David Scott (D-GA) and Randy Hultgren (R-IL) as original cosponsors on October 4, 2017 and was approved by the Financial Services Committee by a vote of 46-14. Committee Chairman Jeb Hensarling (R-TX) supported the legislation during floor debate, saying: “Source code is among a firm’s most sensitive information, and this bipartisan provision balances privacy and due process concerns while preserving the SEC’s ability to obtain such information when necessary.” Committee Ranking Member Maxine Waters (D-CA) criticized the bill, saying it “would severely hamper the ability of the SEC…to investigate market disruptions” and make “it harder for the capital markets cop to detect and stop bad actors.” The package of bills passed the House on a bipartisan vote of 271-145, with 43 Democrats joining all but one Republican in voting yes. This package of bills continues a recent pattern of the House passing targeted legislation in anticipation that the Senate will likely pass a financial services regulatory reform bill in the coming months and a House-Senate conference committee will convene to finalize a package to send to the President for signature.]]>http://mfdf.org/forum-news/article/house-passes-bill-requiring-sec-to-issue-subpoenaSEC Extends Compliance Date for Liquidity Rule Provisions, Issues Additional FAQsThu, 22 Feb 2018 09:11:21 -0500Thu, 22 Feb 2018 09:11:21 -0500http://mfdf.org/forum-news/article/sec-extends-compliance-date-for-liquidity-rule-provisions-issues-additional-faqsJoanne Skerrett<p>The SEC <a href="https://www.sec.gov/news/press-release/2018-24">announced</a> that it extended the compliance date for certain provisions of the liquidity rule by six months. &ldquo;The new compliance date will provide funds additional time to complete implementation of the final rule&rsquo;s classification requirement, along with specified other elements that are tied to the classification requirement,&rdquo; the SEC said in a press release.&nbsp; The requirements for funds to adopt a liquidity risk management program and to limit illiquid investments to 15 percent of the fund&rsquo;s portfolio, will go into effect as originally scheduled. The new compliance date for implementation of the classification and classification-related elements of the rule is June 1, 2019, for larger fund groups, and Dec.&nbsp;1, 2019, for smaller fund groups.&nbsp; The other requirements will go into effect as originally scheduled:&nbsp; Dec.&nbsp;1, 2018, for larger fund groups, and June 1, 2019, for smaller fund groups. The SEC also issued an additional set of <a href="https://www.sec.gov/investment/investment-company-liquidity-risk-management-programs-faq">FAQs</a> related to the liquidity rule, focusing on questions related to the liquidity classification process, and stated that it anticipates considering future amendments to Form N-PORT and Form N-1A related to disclosures of liquidity risk management for mutual funds. Chairman Jay Clayton said in the release that he expects that the action will address certain industry concerns that have been raised since the rule&rsquo;s&nbsp;adoption and that the delay will promote a smoother and more effective implementation process for the rule.&nbsp;</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/0TWblS0wxvM" height="1" width="1" alt=""/>The SEC announced that it extended the compliance date for certain provisions of the liquidity rule by six months. “The new compliance date will provide funds additional time to complete implementation of the final rule’s classification requirement, along with specified other elements that are tied to the classification requirement,” the SEC said in a press release. The requirements for funds to adopt a liquidity risk management program and to limit illiquid investments to 15 percent of the fund’s portfolio, will go into effect as originally scheduled. The new compliance date for implementation of the classification and classification-related elements of the rule is June 1, 2019, for larger fund groups, and Dec. 1, 2019, for smaller fund groups. The other requirements will go into effect as originally scheduled: Dec. 1, 2018, for larger fund groups, and June 1, 2019, for smaller fund groups. The SEC also issued an additional set of FAQs related to the liquidity rule, focusing on questions related to the liquidity classification process, and stated that it anticipates considering future amendments to Form N-PORT and Form N-1A related to disclosures of liquidity risk management for mutual funds. Chairman Jay Clayton said in the release that he expects that the action will address certain industry concerns that have been raised since the rule’s adoption and that the delay will promote a smoother and more effective implementation process for the rule. ]]>http://mfdf.org/forum-news/article/sec-extends-compliance-date-for-liquidity-rule-provisions-issues-additional-faqsSEC Cancels Meeting to Discuss Liquidity Rule RevisionsWed, 21 Feb 2018 12:25:00 -0500Wed, 21 Feb 2018 12:25:00 -0500http://mfdf.org/forum-news/article/sec-cancels-meeting-to-discuss-liquidity-rule-revisionsLeslie Beckbridge<p>The SEC abruptly <a href="https://www.sec.gov/announcement/2018-02-21-open-meeting-cancellation" target="_blank">canceled</a> a meeting it announced last week to discuss revising the compliance date for certain provisions of the liquidity rule, among other items. According to a report in Politico Pro, the quick cancellation suggests that SEC Chairman Jay Clayton is facing political tumult over revising the rules. The SEC has not commented publicly on the meeting cancellation.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/abKH47OOtCc" height="1" width="1" alt=""/>The SEC abruptly canceled a meeting it announced last week to discuss revising the compliance date for certain provisions of the liquidity rule, among other items. According to a report in Politico Pro, the quick cancellation suggests that SEC Chairman Jay Clayton is facing political tumult over revising the rules. The SEC has not commented publicly on the meeting cancellation.]]>http://mfdf.org/forum-news/article/sec-cancels-meeting-to-discuss-liquidity-rule-revisionsTrustees, Adviser Named in Suit after Fund Collapses Amid Market VolatilityWed, 21 Feb 2018 10:00:00 -0500Wed, 21 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/trustees-adviser-named-in-suit-after-fund-collapsesLeslie Beckbridge<p>Shareholders of the LJM Preservation and Growth Fund recently filed a securities fraud class action <a href="http://www.icimutual.com/litigation/relateddocsac.php?ProcID=764&amp;Proceeding=Sokolow%20v.%20LJM%20Funds%20Mgmt.,%20Ltd.,%20No.%2018-cv-1039%20(N.D.%20Ill.%20filed%20Feb.%209,%202018)%20%3Ca%20href=%22https://ecf.ilnd.uscourts.gov/cgi-bin/DktRpt.pl?349179%22%3E(Docket)%3C/a%3E" target="_blank">lawsuit</a> naming the fund adviser, portfolio managers, distributor and trustees as defendants. During the market volatility of early February, the fund&rsquo;s NAV plunged from $9.82 on February 2, to $1.94 on February 7, a &ldquo;massive loss of approximately 80%,&rdquo; according to the complaint. The plaintiffs charge that defendants represented that the fund &ldquo;aims to preserve capital, particularly in down markets (including major market drawdowns), through using put option spreads as a form of mitigation risk&rdquo; in the fund&rsquo;s registration statements and prospectuses. The complaint states that the fund was not focused on capital preservation and left investors exposed to an unacceptably high risk of catastrophic losses and that defendants violated the securities laws by failing to disclose that the fund had not taken appropriate steps to preserve capital in down markets, among other allegations. Several funds have been hard hit by the recent stock market volatility, including exchange-traded products. The Wall Street Journal <a href="https://www.wsj.com/articles/market-volatility-strikes-exchange-traded-products-alarming-investors-and-regulators-1518440400" target="_blank">reports</a> that regulators are examining the fallout from two collapsed ETPs and talking with asset managers linked to these short volatility funds.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/FKverrs3rkY" height="1" width="1" alt=""/>Shareholders of the LJM Preservation and Growth Fund recently filed a securities fraud class action lawsuit naming the fund adviser, portfolio managers, distributor and trustees as defendants. During the market volatility of early February, the fund’s NAV plunged from $9.82 on February 2, to $1.94 on February 7, a “massive loss of approximately 80%,” according to the complaint. The plaintiffs charge that defendants represented that the fund “aims to preserve capital, particularly in down markets (including major market drawdowns), through using put option spreads as a form of mitigation risk” in the fund’s registration statements and prospectuses. The complaint states that the fund was not focused on capital preservation and left investors exposed to an unacceptably high risk of catastrophic losses and that defendants violated the securities laws by failing to disclose that the fund had not taken appropriate steps to preserve capital in down markets, among other allegations. Several funds have been hard hit by the recent stock market volatility, including exchange-traded products. The Wall Street Journal reports that regulators are examining the fallout from two collapsed ETPs and talking with asset managers linked to these short volatility funds.]]>http://mfdf.org/forum-news/article/trustees-adviser-named-in-suit-after-fund-collapsesSEC Sanctions Fund Administrator Entangled in a Client’s WrongdoingTue, 20 Feb 2018 10:00:00 -0500Tue, 20 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/sec-sanctions-fund-administratorLeslie Beckbridge<p>An <a href="https://finops.co/investors/sec-to-fund-admins-no-proof-no-nav/" target="_blank">article</a> in online publication FinOps explores a recent SEC action against fund administrator Gemini Fund Services and cautions: &ldquo;Fund administrators can&rsquo;t assume the assets of the fund are real without the necessary evidence. And they can&rsquo;t offer fund advisors much leeway in producing the necessary paperwork to prove a fund&rsquo;s assets exist.&rdquo;&nbsp;According to a settlement <a href="https://www.sec.gov/litigation/admin/2018/ia-4847.pdf" target="_blank">order</a> with the SEC in which Gemini did not deny or admit the SEC&rsquo;s findings, Gemini reported inflated NAVs to an exchange for over a year because it included fake assets in its calculation. While Gemini did not know that the assets were fake, it was aware that the fund&rsquo;s custodian did not have adequate proof of the existence of many of these fake assets and that there were significant discrepancies between Gemini&rsquo;s records and those of the custodian. According to the SEC, Gemini failed to further investigate the problem with the assets, notify investors or the fund&rsquo;s board of directors that the custodian did not have proof of the validity of the assets, or reduce the share price to reflect the problem. The principal of the adviser was arrested and charged with criminal securities fraud and in 2016 was sentenced to nine years in prison and was ordered to pay about $15 million, among other penalties. The FinOps article points out that while the SEC has fined a fund administrator for ignoring red flags about a client who violated the securities laws, in the Gemini case &ldquo;the SEC appears to also be suggesting a code of best practice for fund administrators, when it comes to recordkeeping discrepancies in striking NAVs.&rdquo; According to people quoted in the article it is unclear why Gemini did not notify the board of the fund or its investors of any concerns. They note that in such scenarios, the CCO of the fund administrator might need to pursue the adviser&rsquo;s CCO and demand the additional documentation. Compliance experts quoted in the article said that fund administrators should spend more time on due diligence before signing a client and be more vigilant about protecting themselves in relationships with advisers.</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=7x3zPXebh5o:UHA0tddkCn4:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/7x3zPXebh5o" height="1" width="1" alt=""/>An article in online publication FinOps explores a recent SEC action against fund administrator Gemini Fund Services and cautions: “Fund administrators can’t assume the assets of the fund are real without the necessary evidence. And they can’t offer fund advisors much leeway in producing the necessary paperwork to prove a fund’s assets exist.” According to a settlement order with the SEC in which Gemini did not deny or admit the SEC’s findings, Gemini reported inflated NAVs to an exchange for over a year because it included fake assets in its calculation. While Gemini did not know that the assets were fake, it was aware that the fund’s custodian did not have adequate proof of the existence of many of these fake assets and that there were significant discrepancies between Gemini’s records and those of the custodian. According to the SEC, Gemini failed to further investigate the problem with the assets, notify investors or the fund’s board of directors that the custodian did not have proof of the validity of the assets, or reduce the share price to reflect the problem. The principal of the adviser was arrested and charged with criminal securities fraud and in 2016 was sentenced to nine years in prison and was ordered to pay about $15 million, among other penalties. The FinOps article points out that while the SEC has fined a fund administrator for ignoring red flags about a client who violated the securities laws, in the Gemini case “the SEC appears to also be suggesting a code of best practice for fund administrators, when it comes to recordkeeping discrepancies in striking NAVs.” According to people quoted in the article it is unclear why Gemini did not notify the board of the fund or its investors of any concerns. They note that in such scenarios, the CCO of the fund administrator might need to pursue the adviser’s CCO and demand the additional documentation. Compliance experts quoted in the article said that fund administrators should spend more time on due diligence before signing a client and be more vigilant about protecting themselves in relationships with advisers.]]>http://mfdf.org/forum-news/article/sec-sanctions-fund-administratorAuthors Offer Strategies on Conducting Effective Board AssessmentsMon, 19 Feb 2018 10:00:00 -0500Mon, 19 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/strategies-on-conducting-effective-board-assessmentsLeslie Beckbridge<p>An <a href="https://corpgov.law.harvard.edu/2018/02/05/valuable-board-assessments/" target="_blank">article</a> by governance experts discusses strategies for achieving effective individual and board assessments. The article cites PwC&rsquo;s&nbsp;Annual Corporate Director Survey, which finds that 43% of corporate directors say their self-assessment process is very effective and 63% of corporate directors say they find the assessment a &ldquo;check the box&rdquo; exercise.&nbsp;The authors note the challenges of getting good feedback from directors and suggest that the biggest roadblocks are: viewing the assessment process as a compliance exercise, using an approach that does not allow for honest feedback and failing to follow-up on the results. The authors recommend re-envisioning the assessment approach and offer five key actions to improve the board&rsquo;s next annual assessment. They counsel that assessments should seek to enhance board dynamics, composition, oversight and practices, reinforce what is working well and highlight obstacles to strong performance. They write that the assessment is best viewed as an ongoing process rather than just a once-a-year event and suggest increasing opportunities to discuss board effectiveness and instituting a formal process for providing director feedback or coaching throughout the year. The article also highlights the critical role that board leadership plays in ensuring directors receive feedback. The authors write that some companies may choose to engage an independent third party to assess board performance and provide perspectives on how the board compares to its peers.</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/APa3zSkYdZU" height="1" width="1" alt=""/>An article by governance experts discusses strategies for achieving effective individual and board assessments. The article cites PwC’s Annual Corporate Director Survey, which finds that 43% of corporate directors say their self-assessment process is very effective and 63% of corporate directors say they find the assessment a “check the box” exercise. The authors note the challenges of getting good feedback from directors and suggest that the biggest roadblocks are: viewing the assessment process as a compliance exercise, using an approach that does not allow for honest feedback and failing to follow-up on the results. The authors recommend re-envisioning the assessment approach and offer five key actions to improve the board’s next annual assessment. They counsel that assessments should seek to enhance board dynamics, composition, oversight and practices, reinforce what is working well and highlight obstacles to strong performance. They write that the assessment is best viewed as an ongoing process rather than just a once-a-year event and suggest increasing opportunities to discuss board effectiveness and instituting a formal process for providing director feedback or coaching throughout the year. The article also highlights the critical role that board leadership plays in ensuring directors receive feedback. The authors write that some companies may choose to engage an independent third party to assess board performance and provide perspectives on how the board compares to its peers.]]>http://mfdf.org/forum-news/article/strategies-on-conducting-effective-board-assessmentsSEC to Discuss Revision of Compliance Date for Liquidity Rule at MeetingThu, 15 Feb 2018 11:50:00 -0500Thu, 15 Feb 2018 11:50:00 -0500http://mfdf.org/forum-news/article/sec-to-discuss-revision-of-compliance-date-for-liquidity-ruleLeslie Beckbridge<p>According to a <a href="https://www.sec.gov/news/openmeetings/2018/ssamtg022118.htm" target="_blank">Sunshine Act Notice</a>, the SEC will hold a meeting on February 21, 2018 to discuss various items, including revising the compliance date for certain provisions of the Liquidity Rule. Industry groups have <a href="https://www.ici.org/pdf/17_ici_sec_liquidity_ltr_supp.pdf" target="_blank">called</a> for a delay of the rule, citing the complexity of the asset-classification requirements and related technological challenges asset managers and vendors are facing. The agenda items for the SEC&rsquo;s February meeting are:</p>
<ul>
<li>whether to approve the issuance of an interpretive release to provide guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.</li>
<li>whether to adopt an interim final rule revising the compliance date for certain provisions of rule 22e-4 under the Investment Company Act of 1940 and related reporting and disclosure requirements.</li>
<li>whether to propose amendments to Form N-PORT and Form N-1A related to disclosures of liquidity risk management for open end management investment companies.</li>
</ul><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/2_t9eh6egfs" height="1" width="1" alt=""/>According to a Sunshine Act Notice, the SEC will hold a meeting on February 21, 2018 to discuss various items, including revising the compliance date for certain provisions of the Liquidity Rule. Industry groups have called for a delay of the rule, citing the complexity of the asset-classification requirements and related technological challenges asset managers and vendors are facing. The agenda items for the SEC’s February meeting are:

whether to approve the issuance of an interpretive release to provide guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.

whether to adopt an interim final rule revising the compliance date for certain provisions of rule 22e-4 under the Investment Company Act of 1940 and related reporting and disclosure requirements.

whether to propose amendments to Form N-PORT and Form N-1A related to disclosures of liquidity risk management for open end management investment companies.

]]>http://mfdf.org/forum-news/article/sec-to-discuss-revision-of-compliance-date-for-liquidity-ruleFee Disclosures, Fund Liquidity, Cryptocurrency Among OCIE’s 2018 PrioritiesThu, 15 Feb 2018 10:00:00 -0500Thu, 15 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/ocie-2018-prioritiesLeslie Beckbridge<p>The SEC&rsquo;s Office of Compliance Inspections and&nbsp; Examinations <a href="https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2018.pdf" target="_blank">published</a> its exam priorities for 2018, again stressing its concern for retail investors and retirees. OCIE said it would focus on firms that have practices or business models that may increase the risk that investors will pay inadequately disclosed fees, expenses, or other charges. For mutual funds, OCIE said it would look into funds that: (1) have experienced poor performance or liquidity in terms of their subscriptions and redemptions relative to their peer groups, (ii) are managed by advisers with little experience managing registered investment companies, or (iii) hold securities which are potentially difficult to value during times of market stress. OCIE will also focus on ETFs and mutual funds that seek to track custom-built indexes to review for any conflicts the adviser may have with the index provider, among other things. Other exam areas include compliance programs and oversight practices for robo-advisers, cryptocurrency, initial coin offerings, secondary market trading, and blockchain. SEC Chairman Jay Clayton along with CFTC Chair Christopher Giancarlo recently <a href="https://www.sec.gov/news/testimony/testimony-virtual-currencies-oversight-role-us-securities-and-exchange-commission" target="_blank">testified</a> before Congress on the need for clearer regulatory controls in these new technologies.&nbsp; OCIE also said that it may examine service providers and other firms, including clearing agencies, national securities exchanges, and transfer agents, focusing on aspects of their operations and compliance with recently effective rules.&nbsp;</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/91f0NaKigIo" height="1" width="1" alt=""/>The SEC’s Office of Compliance Inspections and Examinations published its exam priorities for 2018, again stressing its concern for retail investors and retirees. OCIE said it would focus on firms that have practices or business models that may increase the risk that investors will pay inadequately disclosed fees, expenses, or other charges. For mutual funds, OCIE said it would look into funds that: (1) have experienced poor performance or liquidity in terms of their subscriptions and redemptions relative to their peer groups, (ii) are managed by advisers with little experience managing registered investment companies, or (iii) hold securities which are potentially difficult to value during times of market stress. OCIE will also focus on ETFs and mutual funds that seek to track custom-built indexes to review for any conflicts the adviser may have with the index provider, among other things. Other exam areas include compliance programs and oversight practices for robo-advisers, cryptocurrency, initial coin offerings, secondary market trading, and blockchain. SEC Chairman Jay Clayton along with CFTC Chair Christopher Giancarlo recently testified before Congress on the need for clearer regulatory controls in these new technologies. OCIE also said that it may examine service providers and other firms, including clearing agencies, national securities exchanges, and transfer agents, focusing on aspects of their operations and compliance with recently effective rules. ]]>http://mfdf.org/forum-news/article/ocie-2018-prioritiesFed's Sanctions on Wells Fargo Seen as Warning for Bank BoardsWed, 14 Feb 2018 10:00:00 -0500Wed, 14 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/feds-sanctions-on-wells-fargo-seen-as-warning-for-bank-boardsLeslie Beckbridge<p>As Wells Fargo <a href="https://www.forbes.com/sites/antoinegara/2018/02/05/no-slap-on-the-wrist-wells-fargo-plunges-after-federal-reserve-bars-lenders-growth/#1176a3565f08" target="_blank">reels</a> from the implications of a consent <a href="https://www.federalreserve.gov/newsevents/pressreleases/files/enf20180202a1.pdf" target="_blank">order</a> with the Federal Reserve, industry watchers say that the bank regulator may be thinking more broadly than just Wells Fargo. According to a New York Times <a href="https://www.nytimes.com/2018/02/04/business/wells-fargo-fed-board-directors-penalties.html" target="_blank">analysis</a>, the Federal Reserve&rsquo;s settlement with the bank holding company is an attempt to impress upon banks that their boards of directors should be vigorous, independent watchdogs and could face consequences if they fail. According to the Fed&rsquo;s order, Wells Fargo&rsquo;s governance and risk management practices led to &ldquo;significant violations of law and substantial consumer harm.&rdquo; In a <a href="https://www.warren.senate.gov/files/documents/2018-2-2_Yellen_Letter.pdf" target="_blank">letter</a> to Senator Elizabeth Warren, former Fed Chair Janet Yellen described the Fed&rsquo;s actions, which include a restriction on the firm&rsquo;s growth in total assets -- a sanction which Yellen&rsquo;s letter describes as &ldquo;unique and more stringent than the penalties the Board has imposed&rdquo; against other firms for similar unsafe and unsound practices - and requirements on Wells Fargo&rsquo;s board and senior management to take specific actions to address governance and risk management deficiencies at the firm. The firm&rsquo;s former board <a href="https://www.federalreserve.gov/newsevents/pressreleases/files/enf20180202a4.pdf" target="_blank">chair</a> and <a href="https://www.federalreserve.gov/newsevents/pressreleases/files/enf20180202a3.pdf" target="_blank">former lead independent director</a> were separately reprimanded. Yellen&rsquo;s letter recognized Wells Fargo&rsquo;s actions to reshape its board -- naming an independent director as chair and adding new independent directors. Yellen&rsquo;s letter also indicated that the bank&rsquo;s woes highlight the need for guidance on the attributes of effective boards that the Fed <a href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20170803a.htm" target="_blank">proposed</a> in 2017. That guidance proposed fewer specific directives for bank boards to allow directors to focus on management oversight, strategy and risk management. According to the <a href="https://www.wsj.com/articles/wells-fargo-rebuke-puts-bank-boards-in-feds-crosshairs-1517795119" target="_blank">Wall Street Journal</a>, new Fed Chair Jerome Powell who was instrumental in the Fed&rsquo;s proposing of the guidance is expected to <a href="https://www.federalreserve.gov/newsevents/speech/powell20170830a.htm" target="_blank">continue</a> seeking clearer standards for bank boards.</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=EZ2yFU-BSjA:4RyafOez7HM:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/EZ2yFU-BSjA" height="1" width="1" alt=""/>As Wells Fargo reels from the implications of a consent order with the Federal Reserve, industry watchers say that the bank regulator may be thinking more broadly than just Wells Fargo. According to a New York Times analysis, the Federal Reserve’s settlement with the bank holding company is an attempt to impress upon banks that their boards of directors should be vigorous, independent watchdogs and could face consequences if they fail. According to the Fed’s order, Wells Fargo’s governance and risk management practices led to “significant violations of law and substantial consumer harm.” In a letter to Senator Elizabeth Warren, former Fed Chair Janet Yellen described the Fed’s actions, which include a restriction on the firm’s growth in total assets -- a sanction which Yellen’s letter describes as “unique and more stringent than the penalties the Board has imposed” against other firms for similar unsafe and unsound practices - and requirements on Wells Fargo’s board and senior management to take specific actions to address governance and risk management deficiencies at the firm. The firm’s former board chair and former lead independent director were separately reprimanded. Yellen’s letter recognized Wells Fargo’s actions to reshape its board -- naming an independent director as chair and adding new independent directors. Yellen’s letter also indicated that the bank’s woes highlight the need for guidance on the attributes of effective boards that the Fed proposed in 2017. That guidance proposed fewer specific directives for bank boards to allow directors to focus on management oversight, strategy and risk management. According to the Wall Street Journal, new Fed Chair Jerome Powell who was instrumental in the Fed’s proposing of the guidance is expected to continue seeking clearer standards for bank boards.]]>http://mfdf.org/forum-news/article/feds-sanctions-on-wells-fargo-seen-as-warning-for-bank-boardsMFDF Webinar: Cybersecurity for Mutual Fund DirectorsTue, 13 Feb 2018 10:00:00 -0500Tue, 13 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/mfdf-webinar-cybersecurity-for-mutual-fund-directorsLeslie Beckbridge<p dir="ltr" align="left">Fund directors and trustees know the SEC has been focused on cybersecurity for several years now and it&rsquo;s proven to be a continued and growing focus for the Commission. The initial alert and scramble to shore up processes and consider the findings of the SEC&rsquo;s cyber security sweeps has largely calmed, but the storm rages on with new risks and threats by the minute. In this webcast, we&rsquo;ll explore cyber security from the unique perspective of fund directors and trustees, including:</p>
<ul>
<li>Oversight responsibilities of mutual fund boards</li>
<li>Service provider cyber security risks and considerations</li>
<li>SEC expectations of board oversight related to cyber security</li>
<li>Industry trends and observations</li>
</ul>
<p dir="ltr" align="left">This webinar will be broadcast live from 2:00 to 3:00 Eastern time on Wednesday, February 14, 2018. <strong><a href="http://mfdf.org/event-details?EVENTID=5444" target="_parent">Register online</a></strong>.</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=Avn4Qotmv4U:MkCem8sqZvs:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/Avn4Qotmv4U" height="1" width="1" alt=""/>Fund directors and trustees know the SEC has been focused on cybersecurity for several years now and it’s proven to be a continued and growing focus for the Commission. The initial alert and scramble to shore up processes and consider the findings of the SEC’s cyber security sweeps has largely calmed, but the storm rages on with new risks and threats by the minute. In this webcast, we’ll explore cyber security from the unique perspective of fund directors and trustees, including:

Oversight responsibilities of mutual fund boards

Service provider cyber security risks and considerations

SEC expectations of board oversight related to cyber security

Industry trends and observations

This webinar will be broadcast live from 2:00 to 3:00 Eastern time on Wednesday, February 14, 2018. Register online.

]]>http://mfdf.org/forum-news/article/mfdf-webinar-cybersecurity-for-mutual-fund-directorsCompliance Concerns of SEC Regional Office Seen as Preview of Larger Exam PriorityMon, 12 Feb 2018 10:00:00 -0500Mon, 12 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/compliance-concerns-of-sec-regional-office-seen-as-preview-of-larger-exam-priorityLeslie Beckbridge<p>A client <a href="https://www.jdsupra.com/legalnews/fort-worth-regional-office-of-sec-24245/" target="_blank">alert</a> by law firm Locke Lord reports on a January 11, 2018 conference call held by the SEC&rsquo;s Fort Worth, Texas, Regional Office. The call, which drew 2,000 participants, aimed to increase transparency by discussing the 2017 regional examination findings and previewing some likely priorities for 2018.&nbsp;According to the alert, the conference call focused on deficiencies that have cropped up in exams in the region in 2017, including deficiencies related to advisers&rsquo; compliance policies and procedures. The Fort Worth Regional Office reported that compliance-related citations were included in almost 50 percent of the region&rsquo;s deficiency letters in 2017. The regional office &ldquo;found compliance programs containing policies that were inapplicable to the firm&rsquo;s business operations and, in some instances, included the name of another firm instead of their own. As a result, many firms were already in violation of their own policies,&rdquo; according to the law firm&rsquo;s alert. The regional office reminded conference call participants that the Compliance Rule requires annual review to address any compliance issues from the previous year, as well as any changes in applicable laws. The regional office also warned that it was &ldquo;no fan&rdquo; of CCOs that wear other hats in the firm or report to the general counsel instead of the firm&rsquo;s CEO.&nbsp;</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=tqxxS1q1kn8:epLT-AEoH2Q:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/tqxxS1q1kn8" height="1" width="1" alt=""/>A client alert by law firm Locke Lord reports on a January 11, 2018 conference call held by the SEC’s Fort Worth, Texas, Regional Office. The call, which drew 2,000 participants, aimed to increase transparency by discussing the 2017 regional examination findings and previewing some likely priorities for 2018. According to the alert, the conference call focused on deficiencies that have cropped up in exams in the region in 2017, including deficiencies related to advisers’ compliance policies and procedures. The Fort Worth Regional Office reported that compliance-related citations were included in almost 50 percent of the region’s deficiency letters in 2017. The regional office “found compliance programs containing policies that were inapplicable to the firm’s business operations and, in some instances, included the name of another firm instead of their own. As a result, many firms were already in violation of their own policies,” according to the law firm’s alert. The regional office reminded conference call participants that the Compliance Rule requires annual review to address any compliance issues from the previous year, as well as any changes in applicable laws. The regional office also warned that it was “no fan” of CCOs that wear other hats in the firm or report to the general counsel instead of the firm’s CEO. ]]>http://mfdf.org/forum-news/article/compliance-concerns-of-sec-regional-office-seen-as-preview-of-larger-exam-priorityMFDF Webinar: Sustainable Investing and Mutual Funds: An OverviewThu, 08 Feb 2018 10:00:00 -0500Thu, 08 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/mfdf-webinar-sustainable-investing-and-mutual-funds-an-overviewLeslie Beckbridge<p dir="ltr" align="left">Join Ingrid Dyott, Managing Director, Neuberger Berman and Curtis Ravenel, Global Head of Sustainable Business &amp; Finance at Bloomberg LP and member of the TCFD Secretariat, for an overview of sustainable investing for mutual funds. Curtis will provide an overview of sustainable investing metrics that are used to measure the financial outcome of sustainability. He will also provide an overview of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Ingrid will then discuss the rise in popularity of ESG investing and how funds use the data available to make investment decisions.</p>
<p dir="ltr" align="left">This webinar will be broadcast live from 2:00 to 3:00 Eastern time on Tuesday, February 6, 2018. <a href="http://www.mfdf.org/event-details?EVENTID=5428" target="_blank">Register online</a>.</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=NnkFLocbn5k:iX2rE_jYExU:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/NnkFLocbn5k" height="1" width="1" alt=""/>Join Ingrid Dyott, Managing Director, Neuberger Berman and Curtis Ravenel, Global Head of Sustainable Business & Finance at Bloomberg LP and member of the TCFD Secretariat, for an overview of sustainable investing for mutual funds. Curtis will provide an overview of sustainable investing metrics that are used to measure the financial outcome of sustainability. He will also provide an overview of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Ingrid will then discuss the rise in popularity of ESG investing and how funds use the data available to make investment decisions.

This webinar will be broadcast live from 2:00 to 3:00 Eastern time on Tuesday, February 6, 2018. Register online.

]]>http://mfdf.org/forum-news/article/mfdf-webinar-sustainable-investing-and-mutual-funds-an-overviewDTCC Opens Up Repo Clearing to Non-40 Act FirmsWed, 07 Feb 2018 10:00:00 -0500Wed, 07 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/dtcc-opens-up-repo-clearing-to-non-40-act-firmsLeslie Beckbridge<p>Top clearing and settlement firm DTCC <a href="http://www.dtcc.com/news/2018/january/30/dtcc-opens-new-chapter-for-buyside-participation-in-repo-clearing" target="_blank">announced</a> that State Street Bank and Trust Company and funds managed by Capula Investment Management LLP together completed the first cleared sponsored repo transactions as a collateral provider. DTCC said that although its Fixed Income Clearing Corporation has operated its Sponsored DVP Repo Service since 2005, it only expanded participation in this service beyond registered investment companies in May 2017.Previously, buy-side firms, which include mutual fund companies and money market funds, have been able to provide only the cash side of a centrally cleared trade, <a href="https://www.reuters.com/article/usa-repos-dtcc/u-s-expands-role-for-non-bank-financial-firms-in-repo-clearing-idUSL2N1PP2KQ" target="_blank">Reuters</a> reported. &ldquo;Today, with the addition of institutional participation as collateral providers, we have achieved our goal of providing a true cleared repo solution for the buyside, lowering risk in the market,&rdquo; said Murray Pozmanter, DTCC Managing Director and Head of Clearing Agency Services. &ldquo;As more firms take advantage of the new repo clearing solution, fire-sale risk and price degradation are reduced as result of centralized liquidation services.&rdquo; Industry observers <a href="https://www.thetradenews.com/Post-trade/DTCC-processes-first-US-buy-side-cleared-repo-trade/" target="_blank">say</a> that the transaction facilitates DTCC&rsquo;s aims to bring the buy-side into providing liquidity to the repo market which has traditionally been represented by broker-dealers and banks, which continue to leave that business due to increased capital pressures.</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=NktCyhdo99c:78QbpO4f1mg:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/NktCyhdo99c" height="1" width="1" alt=""/>Top clearing and settlement firm DTCC announced that State Street Bank and Trust Company and funds managed by Capula Investment Management LLP together completed the first cleared sponsored repo transactions as a collateral provider. DTCC said that although its Fixed Income Clearing Corporation has operated its Sponsored DVP Repo Service since 2005, it only expanded participation in this service beyond registered investment companies in May 2017.Previously, buy-side firms, which include mutual fund companies and money market funds, have been able to provide only the cash side of a centrally cleared trade, Reuters reported. “Today, with the addition of institutional participation as collateral providers, we have achieved our goal of providing a true cleared repo solution for the buyside, lowering risk in the market,” said Murray Pozmanter, DTCC Managing Director and Head of Clearing Agency Services. “As more firms take advantage of the new repo clearing solution, fire-sale risk and price degradation are reduced as result of centralized liquidation services.” Industry observers say that the transaction facilitates DTCC’s aims to bring the buy-side into providing liquidity to the repo market which has traditionally been represented by broker-dealers and banks, which continue to leave that business due to increased capital pressures.]]>http://mfdf.org/forum-news/article/dtcc-opens-up-repo-clearing-to-non-40-act-firmsSecurities Lending Lawsuit Targets Major BanksTue, 06 Feb 2018 10:00:00 -0500Tue, 06 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/securities-lending-lawsuit-targets-major-banksLeslie Beckbridge<p>A lawsuit filed in New York by the parent of electronic trading platform firm AQS alleges that six investment banks acted together to keep the firm out of the securities lending business. According to the <a href="https://www.wsj.com/articles/big-banks-accused-of-stifling-competition-in-stock-lending-1517486401" target="_blank">Wall Street Journal</a>, the AQS platform offered participants access to real-time prices on trades that reflected actual bids and offers and increased transparency on fees and pricing in securities lending transactions. The report cited critics who say that the fees collected by middlemen banks on the most lucrative trades would be far lower if borrowers and lenders met in a centralized market where pricing was transparent. A similar <a href="https://www.reuters.com/article/us-stocklending-lawsuit/u-s-pension-funds-sue-goldman-jpmorgan-others-over-stock-lending-market-idUSKCN1AX2NK" target="_blank">lawsuit</a>&nbsp;was filed against the top banks by pension funds in 2017. The AQS platform was sold in a distressed sale in 2016, the Wall Street Journal reported.&nbsp;</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=8tjK4mTS6g0:DKMWjSrX-y4:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/8tjK4mTS6g0" height="1" width="1" alt=""/>A lawsuit filed in New York by the parent of electronic trading platform firm AQS alleges that six investment banks acted together to keep the firm out of the securities lending business. According to the Wall Street Journal, the AQS platform offered participants access to real-time prices on trades that reflected actual bids and offers and increased transparency on fees and pricing in securities lending transactions. The report cited critics who say that the fees collected by middlemen banks on the most lucrative trades would be far lower if borrowers and lenders met in a centralized market where pricing was transparent. A similar lawsuit was filed against the top banks by pension funds in 2017. The AQS platform was sold in a distressed sale in 2016, the Wall Street Journal reported. ]]>http://mfdf.org/forum-news/article/securities-lending-lawsuit-targets-major-banksMore Choices for Investing in Sustainable Funds, says MorningstarMon, 05 Feb 2018 10:00:00 -0500Mon, 05 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/more-choices-for-investing-in-sustainable-funds-says-morningstarLeslie Beckbridge<p>A new <a href="http://corporate1.morningstar.com/ResearchLibrary/article/846182/sustainable-funds-us-landscape-report/)" target="_blank">report</a> by Morningstar covers the landscape of sustainable investment products and notes the rapid growth in the sector. According to the report, there are 235 sustainable funds available to U.S. fund investors. The author <a href="http://news.morningstar.com/articlenet/article.aspx?id=846030">writes</a> that 40 sustainable funds were launched in 2017, and 36 were launched in 2016; and after two years of record flows, these funds have nearly $100 billion in assets. The report commends sustainable funds on their performance, finding that as a group they performed better than the overall fund universe in 2017 and performed well over the last three calendar years. The report also finds that while sustainable funds are generally competitive on expenses, they tend to be more expensive than index products that are currently popular with investors. Further, many of the funds have not yet built a large asset base or 3-year performance track record -- 102 funds are less than three years old and 100 mostly overlapping funds have less than $50 million in assets.&nbsp;</p><div class="feedflare">
<a href="http://feeds.feedburner.com/~ff/ForumNewsFeed?a=d3BO7oD9amc:gd4WziARvr8:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/ForumNewsFeed?d=yIl2AUoC8zA" border="0"></img></a>
</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/d3BO7oD9amc" height="1" width="1" alt=""/>A new report by Morningstar covers the landscape of sustainable investment products and notes the rapid growth in the sector. According to the report, there are 235 sustainable funds available to U.S. fund investors. The author writes that 40 sustainable funds were launched in 2017, and 36 were launched in 2016; and after two years of record flows, these funds have nearly $100 billion in assets. The report commends sustainable funds on their performance, finding that as a group they performed better than the overall fund universe in 2017 and performed well over the last three calendar years. The report also finds that while sustainable funds are generally competitive on expenses, they tend to be more expensive than index products that are currently popular with investors. Further, many of the funds have not yet built a large asset base or 3-year performance track record -- 102 funds are less than three years old and 100 mostly overlapping funds have less than $50 million in assets. ]]>http://mfdf.org/forum-news/article/more-choices-for-investing-in-sustainable-funds-says-morningstarDeloitte Report Hails Global Increase in Women on Boards Thu, 01 Feb 2018 10:00:00 -0500Thu, 01 Feb 2018 10:00:00 -0500http://mfdf.org/forum-news/article/deloitte-report-hails-global-increase-in-women-on-boardsJoanne Skerrett<p>Deloitte released the fifth edition of its <a href="https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Risk/Women%20in%20the%20boardroom%20a%20global%20perspective%20fifth%20edition.pdf">report</a> on Women in the Boardroom with data from nearly 7,000 companies in 44 countries and commentary on women&rsquo;s experiences in the boardroom from across the globe. The report found that 15 percent of all board seats globally are occupied by women, an improvement over the 12 percent reported two years ago. Deloitte further reported that while the global numbers have increased just three percent, the nations of Italy, Norway, Australia, the UK and Canada experienced an increase of approximately 5 percent of women serving on boards of companies. Others showed larger increases, including New Zealand which saw an increase of more than 10 percent; Belgium which achieved a 9 percent increase, and Sweden which saw a 7 percent gain. Several developed countries are introducing policies on a public or private level to encourage diversity on corporate boards, according to the report. State governments in the U.S., including Massachusetts, California, Pennsylvania and Illinois, have passed nonbinding measures in recent years to help increase women&rsquo;s representation on boards, according to the Deloitte report.&nbsp;</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/DnyS4RA1ZW4" height="1" width="1" alt=""/>Deloitte released the fifth edition of its report on Women in the Boardroom with data from nearly 7,000 companies in 44 countries and commentary on women’s experiences in the boardroom from across the globe. The report found that 15 percent of all board seats globally are occupied by women, an improvement over the 12 percent reported two years ago. Deloitte further reported that while the global numbers have increased just three percent, the nations of Italy, Norway, Australia, the UK and Canada experienced an increase of approximately 5 percent of women serving on boards of companies. Others showed larger increases, including New Zealand which saw an increase of more than 10 percent; Belgium which achieved a 9 percent increase, and Sweden which saw a 7 percent gain. Several developed countries are introducing policies on a public or private level to encourage diversity on corporate boards, according to the report. State governments in the U.S., including Massachusetts, California, Pennsylvania and Illinois, have passed nonbinding measures in recent years to help increase women’s representation on boards, according to the Deloitte report. ]]>http://mfdf.org/forum-news/article/deloitte-report-hails-global-increase-in-women-on-boardsFull Transparency for ETFs May Encourage Frontrunning, Vanguard Chief WarnsWed, 31 Jan 2018 10:00:00 -0500Wed, 31 Jan 2018 10:00:00 -0500http://mfdf.org/forum-news/article/full-transparency-for-etfs-may-encourage-frontrunning-vanguard-chief-warnsJoanne Skerrett<p>According to a Financial Times <a href="https://www.ft.com/content/a3de8294-04af-11e8-9650-9c0ad2d7c5b5?ftcamp=engage%2Femail%2Fnewsletters%2Fsmart_brief%2Fsmartbriefnewsletterscontrafcf%2Fauddev&amp;segid=0800933">report</a>, Vanguard CEO Tim Buckley is concerned that speculators may front-run ETF providers who are forced by regulators to disclose their holdings on a daily basis. Buckley&rsquo;s comments come as the industry waits for the SEC to release an ETF rule to replace the current system of exemptive relief for ETF launches. According to the report, Vanguard currently discloses its portfolio holdings with a one-month lag. Actively managed ETFs must disclose their holdings at the end of each trading day -- a condition for exemptive relief. There are several pending applications seeking relief for actively managed ETFs that will not require daily holdings disclosure and the SEC proposed a rule in 2008 that would have required all ETFs to publish all portfolio holdings daily. Buckley told media representatives that Vanguard does not want full transparency for ETFs, adding that publicizing an ETF&rsquo;s daily holdings and required portfolio adjustments can increase opportunities for predatory behavior. In a separate interview with <a href="https://www.bloomberg.com/news/articles/2018-01-16/vanguard-s-new-ceo-doesn-t-like-reading-good-news-about-his-firm">Bloomberg</a>, Buckley discussed a range of topics including market risk, future volatility and the competitive atmosphere in active management.&nbsp;</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/SPlA3upTt4I" height="1" width="1" alt=""/>According to a Financial Times report, Vanguard CEO Tim Buckley is concerned that speculators may front-run ETF providers who are forced by regulators to disclose their holdings on a daily basis. Buckley’s comments come as the industry waits for the SEC to release an ETF rule to replace the current system of exemptive relief for ETF launches. According to the report, Vanguard currently discloses its portfolio holdings with a one-month lag. Actively managed ETFs must disclose their holdings at the end of each trading day -- a condition for exemptive relief. There are several pending applications seeking relief for actively managed ETFs that will not require daily holdings disclosure and the SEC proposed a rule in 2008 that would have required all ETFs to publish all portfolio holdings daily. Buckley told media representatives that Vanguard does not want full transparency for ETFs, adding that publicizing an ETF’s daily holdings and required portfolio adjustments can increase opportunities for predatory behavior. In a separate interview with Bloomberg, Buckley discussed a range of topics including market risk, future volatility and the competitive atmosphere in active management. ]]>http://mfdf.org/forum-news/article/full-transparency-for-etfs-may-encourage-frontrunning-vanguard-chief-warnsAcademics Find “Busy” Directors Rate Low on Shareholder SatisfactionTue, 30 Jan 2018 10:00:00 -0500Tue, 30 Jan 2018 10:00:00 -0500http://mfdf.org/forum-news/article/academics-find-busy-directors-rate-low-on-shareholder-satisfactionLeslie Beckbridge<p>A recent <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3088814" target="_blank">paper</a> from University of Pennsylvania academics finds that busy corporate directors garner low shareholder satisfaction scores. &ldquo;On average, shareholders perceive that the costs of busy directors exceed their benefits. The percentage of &ldquo;For&rdquo; votes that a busy director receives is, on average, about one percentage point lower than that of a non-busy director,&rdquo; the authors <a href="https://corpgov.law.harvard.edu/2018/01/12/busy-directors-and-shareholder-satisfaction/" target="_blank">write</a>. They add that the drop in shareholder satisfaction for busy directors holds even when controlling for various factors, including a director&rsquo;s age, tenure, gender, retirement status and committee membership. The authors note that unlike other academic work which measures firm-level performance implications of corporate boards that have a large proportion of &ldquo;busy&rdquo; directors, their research develops and validates shareholder voting as a proxy for shareholders&rsquo; satisfaction with busy directors. The authors also note that the negative relation between shareholder satisfaction and busyness is smaller for retired directors and is larger for directors who are full-time executives and who sit on boards where fiscal-year-ends cluster in the same month. A previous <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3012820" target="_blank">study</a> examined the effect of busy corporate directors on the value of a set of international firms from 1999-2012 and concluded that firms with busy directors who sit on multiple boards exhibit lower market-to-book ratios and reduced profitability.&nbsp;</p><div class="feedflare">
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</div><img src="http://feeds.feedburner.com/~r/ForumNewsFeed/~4/KqiHY90u6LU" height="1" width="1" alt=""/>A recent paper from University of Pennsylvania academics finds that busy corporate directors garner low shareholder satisfaction scores. “On average, shareholders perceive that the costs of busy directors exceed their benefits. The percentage of “For” votes that a busy director receives is, on average, about one percentage point lower than that of a non-busy director,” the authors write. They add that the drop in shareholder satisfaction for busy directors holds even when controlling for various factors, including a director’s age, tenure, gender, retirement status and committee membership. The authors note that unlike other academic work which measures firm-level performance implications of corporate boards that have a large proportion of “busy” directors, their research develops and validates shareholder voting as a proxy for shareholders’ satisfaction with busy directors. The authors also note that the negative relation between shareholder satisfaction and busyness is smaller for retired directors and is larger for directors who are full-time executives and who sit on boards where fiscal-year-ends cluster in the same month. A previous study examined the effect of busy corporate directors on the value of a set of international firms from 1999-2012 and concluded that firms with busy directors who sit on multiple boards exhibit lower market-to-book ratios and reduced profitability. ]]>http://mfdf.org/forum-news/article/academics-find-busy-directors-rate-low-on-shareholder-satisfaction